XLC recovering on Relative Rotation Graph, but for how long?
Julius de Kempenaer |
On the daily Relative Rotation Graph above, the new XLC sector is positioned inside the improving quadrant. XLC moved into the improving from lagging 5 trading days ago and is now heading higher on both scales at a positive RRG-Heading.
Measured on the JdK RS-Ratio scale (horizontal axis), XLC is still one of the weaker sectors in the S&P universe with only XLRE and XLU at lower RS-Ratio levels. The big difference is that XLRE and XLU are heading South-West while XLC is heading North-East.
Combining this view of RRG with the weekly version (below) makes clear that there is a good chance that the current positive rotation on the daily RRG will have a hard time completing a rotation into the leading quadrant.
The distance from the 100-level on the RS-Ratio scale is big enough to roll over and complete the rotation through improving and then back to lagging, thus confirming the weak position on the weekly RRG.
All in all the current relative improvement for the new Communications Services sector seems to be a recovery within a longer term relative downtrend.
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Julius de Kempenaer | RRG Research
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About the author:Julius de Kempenaer is the creator of Relative Rotation Graphs.
This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January 2011 and was released on StockCharts.com in July 2014.
A graduate of the Dutch Royal Military Academy and former captain in the Dutch Air Force, Julius first began his career in the financial industry in 1990 as a portfolio manager.
He is now the director/owner of RRG Research in Amsterdam.